It is quite simple to manage cash flow when things are going well. However, this is not so easy when sales are slow or your expenses make an unexpected rise because of an emergency. Here are seven tips that you can use when the chips are down and when things are not moving like you want them to.
1 – When the chips are down, cash flow is more important than profit.
Profits come and go, but what kills businesses is the inability to survive between the peaks. Cash flow is what counts during the bad times, so make sure that you put an emphasis on it. Let your investors know ahead of time about your change in priority so that they will give you a stable backing to rely on.
2 – Start collecting your receivables.
Always remember the more cash you have on hand, the better. When times get tough, it is time to call in all of your favors. Double up on your receivables so that you can at least get the money that you are owed. Use your current hardship as an emotional plea to encourage people to pay up.
3 – Save cash during good times.
The average investor in all businesses spends a lot during times and only realizes that it is time to tighten their belts during bad times. Instead, remind yourself to reserve cash and save while things are going well so that you will have a cushion during the down times.
4 – Get creative when it comes to sales.
Just because times are tough does not mean that customers will not buy. They may just need to be incentivized. Do not be afraid to pull out those low budget, high risk ideas. People will forgive you if they do not work; hey, times are tough.
5 – Keep track of every penny digitally.
You will invariably save more if you monitor every penny like a hawk. It can be nearly impossible to do this manually, but with today’s technology, the job actually becomes quite easy. You can keep your cash flow sheets on Excel in your Dropbox so that everyone can see them; this does not cost you anything.
6 – Consolidate your loans for easy management
It can be tough when you have various loans to pay every month. If you are able to consolidate your loans into one big chunk, this would allow you ample time within the month to come up with funds to pay your loan regularly. Not sure how to do it? Check out this video about debt consolidating.
7 – Extend all of your payables.
Calling in favors means you are asking favor from your suppliers in regards to your credit lines — if possible. You can do this if your accounts payables are duly maintained when times were good. You can certainly lean on these if you are asking for a little more time to settle your accounts.
It can be difficult to manage your cash flow when times are tough. However, this is the time when your financial philosophy and your discipline will prove itself worthy. Follow the tips above and pay attention to your trusted financial advisors in order to get yourself out of your current bad situation and stay out of it!